Cadbury wants to blitz Wrigley with a new gum - called Trident

Cadbury Schweppes, the world's largest confectionery group, is to challenge the dominance of Wrigley's in the UK chewing gum market with the launch next year of its American brand Trident.

The move, announced yesterday by Todd Stitzer, its chief executive, at an investor seminar, is part of Cadbury's wider efforts to focus on a smaller number of international marketing and brand innovation initiatives behind a selection of the group's stronger brands. The Cadbury's boss also told investors that the group, which is under pressure from rising production costs, was to abandon its long-standing targets for annual margin growth of between 0.5 and 0.75 of a percentage point. Last week the company conceded margins were likely to be flat in the current year.

The British gum market has been shrinking over the last two years, but Wrigley's, the market leader with a 98% share, insists it is confident it can fend off a competitor such as Cadbury's without having to resort to a price war. "We believe Cadbury will be a solid competitor, but we know how to hold on to our market position," said Gharry Eccles, UK managing director of Wrigley's. The company is also market leader in the US market, where it sells twice as much gum as Cadbury brands.

Four years ago Cadbury's had tried to take on Wrigley's dominance of the UK, its home market, with the launch of Trebor 24/7, a gum variant of the mint-flavoured sweet brand. The product flopped and was ditched within 18 months. Since then, however, Cadbury's has acquired US gum specialist Adams, which brought with it the fast-growing Trident brand, the number two gum in the world behind Wrigley's Orbit. The Cadbury's gum stable also includes Dentyne, Bubblicious and Clorets.

Mr Stitzer noted the UK gum market had shrunk by 6% last year and 5% in 2004. "The British chewing gum market is going backwards and needs competition to drive the market," he said. Cadbury's hopes its strong UK distribution network will help it mount a more serious challenge to Wrigley's this time.

Simon Baldry, Cadbury Trebor Bassett's managing director, said: "We see massive potential in the UK for Trident. [It] is one of the top 10 gum markets in the world."

Mr Stitzer told yesterday's investor seminar Cadbury's had been substantially refocused in his three years as chief executive, with greater focus behind high growth categories such as chewing gum. Cadbury's had also turned around its US fizzy drinks sales with successes such as Cherry Vanilla and Berry and Cream flavoured Dr Pepper.

After the seminar, Rob Mann, an analyst at Collins Stewart, said: "There was disappointment over the sales target [unchanged at between 3% and 5%]. Cadbury said they had transformed the company but they are holding the sales target - so what was the point of the transformation?" Shares in Cadbury closed down 8p at 529p.

Last week Cadbury blamed the hot summer and product recalls for a weaker-than-expected confectionery market. Sales since the beginning of July fell by 5% compared with the same period in 2005.

Asked whether trends toward healthier eating were having an impact on sales, Mr Stitzer said: "Despite obesity scares, the global confectionery market still grows at 4% to 5% a year, while less than 2% of a British person's diet is confectionery."

Mr Stitzer said the group would adopt a dividend policy more in line with earnings. For the current year, the final dividend is likely to be increased by 10%, taking the total to 9.9p and leaving the annual rate of increase at 8%.